China: state reserve sales auction

Today’s state reserves auction resulted in the sale of 39,138.86 tonnes, comprising 15,875 tonnes from the domestic 2011/12 crop, 7,307 tonnes from 2012/13 and 15,957 tonnes of imported lots from the 2011/12 season. The sum of the daily auction sales figures during the current series to date now stands at 2,149,524 tonnes. Our estimate of the quantity of cotton remaining under government control is slightly over 8.9 million tonnes.

By June 13, the 1,332 mills registered to participate in the state auctions were shown to have purchased 2,093,398 tonnes (the total is somewhat less than the sum of the reported daily auction figures), or about 23 percent of the theoretical amount that could be bought by July 31. The number of mills that have bought 50 percent or more of their theoretical entitlement is 160. Weiqiao, the biggest buyer, has taken up 171,056 tonnes, which represents 25 percent of its entitlement. 309 mills have yet to buy anything at the auctions. Details by mill are shown here.

Based on the daily auction figures, the data suggest a theoretical import quota allocation so far during the current auction series (which commenced on January 14) of around 716,000 tonnes under the 3:1 pinciple (one tonne of quota for every three tonnes purchased), though it should be noted that not all mills that have participated in the auctions may be elgibile to receive quota. The figure for May (quota which is presumably now being made available) would on this calculation have been close to 200,000 tonnes, while the figure for June so far is around 80,500 tonnes.

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